Every person's credit score will be affected in some way or another following Chapter 13 bankruptcy proceedings. In most cases, those effects will be negative and damaging to your credit for a period of up to seven years. However, a bad credit score doesn't mean you'll be barred from building up your credit rating.
Here are a few tips to keep in mind when rebuilding your credit after a Chapter 13 bankruptcy:
- Get a secured credit card that doesn't check your debt. To have a secured credit card, you'll need to place a financial deposit on the card and deal with high interest rates. As such, never carry a balance on a card like this.
- Ask someone with good credit to make you an authorized user of their credit card account.
- Get a credit-building loan from a bank. If you take out a loan and use the loan itself to pay back the money borrowed, you'll succeed in gradually increasing your credit rating.
- Remember that you should gain approval from the bankruptcy court before getting a new credit card or loan while your bankruptcy process is happening. In most cases, borrowers can gain approval from the court to get another loan if that loan does not pose a threat to the borrower being able to adhere to his or her Chapter 13 plan obligations.
Remember that bankruptcy is a step forward in the direction of financial security. Although your financial recovery may take time to conclude, the closer you get to the seven-year mark, the closer you'll get to fully repairing your credit score so it's better than it ever was in the past.
Source: nj.com, "Can I fix my credit score after bankruptcy?," accessed April 20, 2018